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HomeminewsLuxottica Predicts Global Eyewear Contraction, Except in Australasia

Luxottica Predicts Global Eyewear Contraction, Except in Australasia

The global eyewear industry is likely to contract by around 10 per cent, according to eyewear manufacturer Luxottica.

It announced a series of measures to drive sales and reduce costs including a 10 per cent reduction in the entry prices of its luxury and premium frames. Cost-cutting action will include making manufacturing reductions, closing stores, eliminating brands and making cuts to advertising.

A company statement to analysts said that what the industry was seeing was ‘not a temporary crisis, not a drastic and definitive change, but a global structural reset of the relevant market resulting in resizing by 10 per cent’.

The consequences for Luxottica’s wholesale business will include a 15 per cent reduction in its eyewear manufacturing volume as well as the dropping of three low-performing brands and a reduction in the number of frame styles.

Luxottica intends to reduce its capital expenditure and close117 stores in North America and will franchise another 56 stores. A further 110 retail units are also ‘under review’ according to Luxottica’s chief executive officer, Andrea Guerra.

However, in stark contrast to this gloomy outlook, Luxottica has set its sights on the New Zealand retail scene, with the announcement that it will invest at least AUD$30 million in its OPSM and Sunglass Hut outlets and increase its workforce there by 50 per cent over the next few years.

The company, which has more than 6000 optical and sun wear retail stores around the globe and has household names such as Oakley and Ray-Ban amongst its brand portfolio, is looking to increase the number of local stores from 100 to 160 over the next five years.

This would see its New Zealand workforce increase from 400 to 600 at a time many retailers are struggling to overcome consumer apathy.

Luxottica Australia, South East Asia and South Africa chief executive Chris Beer says that despite the softening in sales, the company’s operations in Australasia were continuing to see profit growth.

“Our strategic plan is to grow our brands, so that is what we are focused on now. The tough economic times won’t last forever and we will be well placed in terms of market share when the economy turns around.”

Mr. Beer says the New Zealand expansion follows a similarly aggressive growth plan in Australia, but will still have a local focus.

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